betty: welcome to the bloomberg tv special, "china: behind the wall." i travel to beijing to visit china's historic statehouse. there, i spoke with one of the country's highest rating officials. a former ambassador to the united states, a leader in the powerful state council, and china's negotiator on foreign policy. we talked about the most pressing issues between the two countries from cyber spying to the most recent market turmoil. but first, we begin on chinese

president xi jingping's visit to the united states. betty what does he hope to : accomplish in the u.s.? >> i think a lot can be accomplished. i believe the following three areas are very important. first, it is for the two leaders to have in-depth discussions following the discussion in california and in beijing about the international situation, about our respective country's policies. to chart a way forward further in our relationship. we expect that there will be quite a few positive practical cooperation results flowing from

the visit. what people called "deliverables." i believe that the president will reach out to the american society to build the friendship between our two people. betty: people have said for this visit could be compared to the visit in 1979. is that important to the relationship between the u.s. and china. is that accurate? how critical is this visit to china? >> his visit to the united states was a historic visit, opening up the relationship between our two countries. i think this visit is also vitally important. the united states has actually emphasized that they hope that this relationship and this visit will be a milestone, putting our relationship firmly on a

positive trajectory. betty: the american public still have a mistrust of the chinese. a pew center poll recently said 54% of americans view china unfavorably. how does the president plan to change that perception? >> poll results very from time to time and from place to place. my understanding of american society is that there is a deep awareness of the importance of nurturing better relationship between our two countries. so i believe that the american people attach a great deal of importance to the visit. we have had some early harvest of this new model of the relationship between us. for instance, the trade between the two countries has grown quite a bit, and there are more

student exchanges between us. and on the international scene, there has been good coordination between china and the united states, from the middle east to some parts of africa. from afghanistan to the korean peninsula. so a better relationship is in the interest of both of our peoples and the world. of course, a relationship cannot be free from any problems. even people sometimes do not see things in a common way, and i think for countries sometimes they might have some divergence of views. that is not that important so long as we put the differences in proper perspective. betty: let's talk about the economy. recently, the chinese government devalued the renminbi and the stock markets around the world reacted quite violently.

going to talknt about the economy and how would he describe the state of the chinese economy? >> during the course of the visit the two presidents will cover much ground. they will talk about the world economic situation, the economic developers, the respective economies and the economic policies. it is very important on the macro level that the two countries have more coordination of their policies. but let me point out that since the outbreak of the financial crisis seven years ago people have all worked very hard to revive the world economy. it is not as far as people have expected, but that does not mean that we should not continue our good efforts and china has done its part. we are no longer having double-digit growth rates.

it's just like a high jumper, the higher you go, the more difficult to raise the level. on the other hand, we still have a handsome 7% growth rate here in china. of course, china is not free from its own set of challenges and problems on the economic front. of course, there have been some ups and downs in the stock exchange market, but given china's economic development, given the fact that china is a developing country, some movements on the stock exchange in china should not equal the whole picture of the chinese economy. betty: why devalue the value of the renminbi now?

especially so close to the president's visit? mr. jiechi: we let supply and demand determine the value of the remnibi. i think generally speaking it is quite steady in value. and we will, of course, continue to do reform in china. in various sectors, including the financial sector. and when people look back 10 years or 15 years from now, we see that the market reform is really good. not only for china, but for the rest of the world. , 12 months from now, will the rmb be lower in value? mr. jiechi: it is normal for the currency to move either way. but it is a reliable currency, and more and more people actually do their trades in rmb.

and i am sure it will continue to play a healthy role not only in the chinese community but in the international trade and investment and so on and so forth. betty: were you surprised by how the markets reacted to the devaluation of the renminbi? mr. jiechi: let me say this. every country has its challenges and their problems, and every country should do a better job of their own economy. [laughter] betty: they should mind their own business, right? mr. jiechi: i do not mean that. what i mean is that the chinese economy is a big one, but it is not that big. there are many players in the field. so their economic performance fundamentally has an impact on the behavior of the financial market and so and so forth. and the difference between the chinese stock exchange and the stock exchange of many western

countries is there are far more institutional investors in the west. and, of course, there is always room for improvement for anybody, so i do hope that people will take an appropriate and calibrated approach to what happens in the financial markets, wherever it might be. in china or in other countries, so people should be respectful to facts and to be fair. and china is a positive force for good economic growth and will continue to be. betty: our bloomberg growth index pegs the chinese economy growing at a slower 6.6% gdp. so is, in fact, growth in china slower than what the statistics suggest? mr. jiechi: i think our

statistics are quite reliable. it is about 7% growth rate. that is our projection. of course, we have to do our level best to make sure the economy will go forward. betty: coming up, china faces accusations of cyber spying on american companies. how do you account for the white house? they say they can trace those cyberattacks back to origins in china. stay tuned for more on my interview with china's top foreign-policy official. ♪

that in theeve spirit of equality, mutual benefit, and mutual respect, china itself is a victim of theing activities and chinese government is firmly against hacking of any kind. shouldhink every country take a responsible, prudent attitude and should proceed on

factual ground. betty: so how do you account for the white house, they say they have evidence that recent -- they can trace those cyberattacks back to origins in china. had you account for that? >> i think it is better to let the american side tell people there position. two side stay close on this issue. i believe it is important for any government to adopt a prudent and responsible attitude. let me say, china is a responsible country in the world. we are firmly against any kind of hacking activities. we are against cyber theft and china and the united states can

work very closely on this issue. to make the cyberspace secure, transparent for all. ready: foreign policy is likely to figure very prominently in the presidential elections in the u.s. we have heard a lot of news in the south china sea. hillary clinton had made comments about the dispute. there is a concern by the all abide international roles. she was speaking about china that time. so, why has china recently begun reclaiming so much land in the south china sea? land ine not reclaiming

the south china sea. there has been some construction on the islands and reefs. so china has solid, legal ground , historical facts to back up our position. that: but the u.s. says unclaimed land has been added to the island. they are a part of chinese country. of some purpose construction on these islands and reefs is merely to serve public interest -- international interest. of course, given the fact that some of our territory is surrounded by military

installments of other countries, there is reasonable ground to have some defense facilities on these islands. betty: there is a military airport being there, right? even for aviation is for civilian purposes mainly. should take aple reasonable stand on it about the sometes between china and other countries. that the parties directly concerned should handle and try to solve these differences through from the consultation and negotiation. this is exactly stipulated in

the declaration of conduct of parties in the south china sea. betty: it is my understanding that the philippines out of their opposition to what is going on in the south china sea. the chinese have refused to engage in that complaint. have signedppines on and china made it very clear that such disputes, or similar disputes, should be solved by the parties concerned. we will not participate in any kind of adjudication as you have mentioned. china made its if you very clear. about 10 years ago, china made its position very clear. so i believe it would be good for everybody to keep its word

and do what they have promised. betty: if you look at the dispute in the south china sea, the chinese sending navy ships off the coast of alaska when the president was visiting. commemorating the ending of world war ii. some look upon that as increasing military aggression by the chinese. >> let me say that the commemoration of the 70th anniversary of the chinese people's world resistance against the japanese aggression and against fascism -- the is toe of the celebration bear in mind history and to respect the fallen heroes and two chairs piece -- and to cherish peace. this kind of celebration is not directed at any government.

address at the event, the president actually mentioned in a very emphatic way. let me say the military of any should move according to international law and that has always been china's position. of course, we have certain complaints about what other countries have done, but facts are facts. facts speak louder than words. betty: when people look at the military parade, with all due respect, they saw ballistic missiles, the so-called aircraft carrier killer, is that a sign of peace? >> china is a big

developing country. the necessary defensive forces to make sure that our country is secure. there is nothing wrong about that. world,look around the you know that it is a very complicated phase. china's military force is for national defense. period. i hope people don't think there are other motives. from myuch more ahead conversation including china's view of our presidential race. >> the general direction of the relationship is developed. betty: we return after the short break.

betty: a comeback. china has emerged as a hot topic among residential candidates. none of it is good. mr. trump: the are doing and china is a bubble ready to

explode. 80: i asked if this could strain relations. the general direction of the relationship is development. heard from the general public in both countries is that this is very important and we have to make sure that the visit will be a great success. i think that's the true feeling of the two peoples. betty: when the doubt plunged -- when the dow plunged 1000 points , you came out very forcefully and said that this is china's fault. the china made this mess because .hey devalued the renminbi if the chinese government ready to deal with the president trump? >> i have just expressed my

views on the financial markets on various countries. i think any country should look at the facts and come to the right conclusion. i am not going to comment. comment on anyto particular person's views. when you look at the u.s. stock exchange, sometimes it goes down, sometimes it bounces back. we wish america well. there has been recovery of the american economy and we wish the american economy better and better. i said that it is not good for to point and accusing finger at somebody else. would you like to

see accomplished between the u.s. and china in 12 months? >> in 12 months? let's work hard to make the president's visit a success. be out thatage china and the united states will continue to build this new model of a good relationship between china and the united states. i think it is also very important for people to view things from a new perspective that is we are in the 21st century. the 21st century is a great century. there are lessons to be learned as well. able should adopt a more forward-looking attitude. betty: on a final note, i have spoken a lot of the concern of the americans, but i am curious, what deeply concerns you the most? what keeps you up at night?

in this information age, diplomacy is going on somewhere while i am asleep or awake. i have to make sure that things will function in "normal fashion." people of thethat world aspire for a better tomorrow and the responsibility of diplomats looks to bridge the gap between various countries and to promote good interaction among the peoples in the face of problems,ange, energy terrorism, and many other things. i think china and the united states and many other countries should work together. if we all pitch in and do our best, the world will be a better

place. betty: for more of my interview, go to bloomberg.com. thanks for watching this special report. i am betty liu in beijing.

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